$36 million in casino rent

City wants the money and exacting 'green' specifications, too

Baltimore expects developers interested in operating the city's only slots casino to pay at least $36 million in yearly rent to the city and build it to exacting environmental specifications, officials told about a dozen lobbyists, lawyers and developers yesterday.

The city's demands come on top of a 67 percent state tax rate that some analysts say threatens the viability of five casino licenses statewide approved by voters as a way to rescue Maryland from financial crisis. The national economic meltdown, not envisioned when the General Assembly hammered out the slots proposal in 2007, has raised further doubts about the success of slots at a time when gambling projects nationwide are struggling.

"I think it's a mistake," Senate President Thomas V. Mike Miller said yesterday of Baltimore's bidding criteria. Miller, a major force behind the constitutional amendment legalizing slot machines, called on Gov. Martin O'Malley to negotiate lower expectations with Mayor Sheila Dixon, and he said he worried the city's requirements could "serve as a deterrent to significant investors."

Deputy Mayor Andrew Frank said the city would not modify its criteria before bids are due to a state commission Feb. 2. "We have hopes that our figures will bear out," Frank said, "but if they do not, we will have to sit back down with the state to talk about how to move forward."

When state voters in November legalized the establishment of 15,000 slot machines in Maryland, they set in motion a possible 3,750-machine Baltimore casino slated for two parcels of city-owned land in a warehouse district south of the Inner Harbor.

Yesterday, about a dozen people - some of them representing potential bidders such as the Cordish Cos., some of them lobbyists with gambling-industry clients - met with Frank and Baltimore Development Corp. officials for a Q&A session.

Among potential bidders in attendance were representatives of a Camp Springs entity called the Harbor Group, developers interested in the Baltimore site, said Michael Cryor, a consultant for the group.

Cryor is also chairman of the Maryland Democratic Party, and said he would announce his resignation from that post today.

The 62-year-old Roland Park resident said he decided to step down from the party leadership after 18 months because he was "tired" and felt he had accomplished his goals for the party. But he acknowledged that representing a developer seeking a potentially lucrative license from the state might raise eyebrows if he remained a party official.

At yesterday's meeting, BDC officials stressed their high expectations: Baltimore is counting on ground rent from developers to lower the city's property tax rate, and it wants a high-class casino in the shadow of M&T Bank Stadium. "I don't want another Cow Palace," said Kimberly A. Clark, executive vice president of BDC, referring to a barn-like exhibition hall at the State Fairgrounds in Timonium.

But some analysts believe the state's high tax rate threatens the quality of likely development, and said the city's high expectations could further undermine interest. "I think it is unlikely an operator can pay more than $15 million a year or so for land rent," said Jeffrey Hooke, a Bethesda-based investment consultant who analyzes gambling issues. "Thirty-six million [dollars] seems unrealistic, but there is no harm in asking."

Hooke also said he believed the 6.4 acres offered to developers might be insufficient. "Ideally, the slots operator would like at least 10-12 contiguous acres for the facility and parking," Hooke said, dismissing as unworkable a city proposal that the developer use parking lots across busy Russell Street.

Joseph Fath, a gambling analyst for T. Rowe Price Group in Baltimore, echoed Hooke's concerns. The rent demand "is too high to get a decent facility built," he said. "The tax rate is bad enough, but to ask them to pay $36 million on top of that ... seems like a stretch, especially in this environment."

The city also expects the slots facility to be built to the LEED silver standard, a U.S. Green Building Council environmental certification.